The battle of the Gas-sucking mega giants is set to begin

Off the coast of Western Australia, a battle between mega giants is unfolding. The combatants involve the world’s biggest semi-submersible platform, the longest sub-sea pipeline in the southern hemisphere, and the largest floating facility ever built.

They’re all there for the same reason: natural gas – and they’re hoping to start drawing it up this month.

As several countries begin to move away from coal as an energy resource, this alternative fossil fuel, which produces 50% less carbon dioxide for every unit of energy generated, is increasingly in demand in our energy hungry world.

Consumption is forecast to rise to 177 trillion cubic feet (tcf) or 5,012 billion cubic metres by 2040, up from 124tcf in 2015, says the US Energy Information Administration.

That’s why Shell’s gigantic Prelude platform – which is 488m (1,600ft) long and displaces roughly as much water as six aircraft carriers – is competing with Japanese firm Inpex for access to gas in the Browse Basin.

Although they are working on separate gas fields, those fields are connected. Shell and Inpex are essentially vying for the same resource.

“The way I describe it – I have a slide I present to clients and I have a picture of two people drinking out of the same milkshake,” says Saul Kavonic, an analyst at energy consultancy Wood Mackenzie.

Prelude is a true behemoth

It has been designed not only to collect gas from sub-sea well heads, but also liquefy it on board at temperatures of -162C.

As a liquid, the gas takes up significantly less space, making it easier to transport around the world on ships. This liquefaction would usually be done after piping the gas onshore, but Prelude can do the job herself – something never achieved on such a scale before.

Some serious technology is involved in making this happen.

Prelude has high-capacity pumps that can draw 50 million litres of water from the sea every hour to help cool down the natural gas. Once liquefied, it is then stored in massive storage tanks with a volume equivalent to 175 Olympic swimming pools.

And this all has to keep going even through the worst imaginable weather. Prelude’s hefty mooring chains are designed to survive Category 5 cyclones.

While Inpex has opted for sending its gas onshore for liquefaction, it also has a huge offshore semi-submersible platform to extract water and impurities from the gas first. And nearby, there is a floating storage and off-loading facility called Venturer.

However, both projects have been beset by delays and spiralling costs, which may be why neither company was prepared to talk to the BBC for this feature.

The pressure to start drawing gas first is obviously intense.

The race for Browse Basin gas has even ignited competition on an international scale. Australia may overtake Qatar to become the world’s top exporter of liquefied natural gas (LNG) once Ichthys and Prelude production is in full swing.

But will any future vessel match or even exceed the scale of Prelude?

Mr Kavonic says the fossil fuel industry isn’t likely to try to build one any time soon.

“We need new projects to meet demand [for gas] in the early 2020s,” he explains. “We needed projects to be sanctioned last year and that didn’t happen, we only saw one.”

That single project will be built by Italy’s oil and gas giant Eni. A floating facility off the coast of Mozambique, it will have a slightly smaller capacity than Prelude – 3.4 million tonnes of LNG per year versus Prelude’s 3.6 million. The capacity of Ichthys will be much bigger, at 8.9 million tonnes.

“There’s so far no [other] similar projects under the radar,” says Jean-Baptiste Dubreuil from the International Energy Agency.

The only other comparable vessel might be Allseas’ Amazing Grace – an enormous twin-hulled construction ship due to be built over the coming years. Its job will be to lift offshore platforms, however, not process gas.

Without more projects for gas production, industry watchers worry that, in about five years’ time, demand for natural gas could outstrip supply.

There is the “spectre of an LNG supply shock in the early 2020s” looming, says Stuart Elliott, gas editor at data provider S&P Global Platts.

The problem could be particularly pronounced in Asia – especially China.

“Last year, Chinese production increased by 8%, but they’re not able to keep up with the growth of demand,” says Mr Dubreuil. “We expect their needs for imports will grow over time.”

In fact, the IEA thinks that China will be importing 43% of its natural gas by 2040. This supply will need to be reliable if the country wants to avoid the gas shortages it experienced last winter – caused, ironically, by a botched attempt to cut coal use.

In the meantime, there is some hope that the unexpectedly speedy growth of renewables – particularly solar and wind – will help to plug the gap.

But there’s little doubt that over the next few decades many countries, including the UK, will be heavily reliant on gas for their energy needs.

Prelude and Ichthys are due to come online soon, but neither Shell nor Inpex will commit publicly to a start date.

And with wholesale natural gas prices currently half what they were in early 2014, such multi-billion dollar projects may never recoup their outlay.

As climate change climbs to the top of the world’s agenda, funding such huge fossil-fuel extraction projects – impressive feats of engineering as they are – will look increasingly risky.

Both Shell and Inpex must be hoping that their sea-faring mega giants don’t go the way of the dinosaurs.

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